Country overview

#18

United Kingdom

Country stats

Rating Points

385

This indicator describes the overall rating of a given jurisdiction on several parameters according to cryptocurrency operations - market volume, crypto regulation, business climate, taxation framework.

Crypto Penetration

5.5%

Estimated percentage of crypto users out of the country's total population based on public data.

Legal Entities

Number of crypto companies registered in the country based on regulator data if available or other types of public data.

Regulation Points

200

An overall assessment of the granularity of crypto regulation in a given country. A high score is also given to countries where cryptocurrency transactions are highly regulated.

Amount of crypto users

3 701 500

Total amount of crypto users out of the country's total population based on public data.

Taxation points

This figure, according to our analysts' calculations, indicates the overall level of tax burden for cryptocurrency transactions in a given country. The higher the indicator, the lower the burden.

Market volume points

191.3

A rough estimate of this jurisdiction's retail crypto market relative to the rest of the world. The higher the indicator, the higher the market potential.

Status of crypto

Legally allowed

General status of cryptocurrency regulation in this jurisdiction.

Crypto payments

Legally allowed

The legal status of cryptocurrency payments for goods and services in a given country based on information from regulators, public data and feedback from our community.

Security Level

Minor danger

The overall level of security in a given country based on open data.

Crypto Salaries

Legally allowed

The legal status of cryptocurrency salaries to employers in a given country based on information from regulators, public data and feedback from our community.

Business Climate

Medium

Overall assessment of the friendliness of this country for crypto-business. This indicator takes into account the cost of obtaining a license and the attitude towards crypto entities in the country.

Stablecoin Regulation

Complete

This indicator is evaluating the regulation of stablecoins in a given country. Complex regulation means that it is possible to issue steiblcoins and obtain a license for this activity. Basic regulation means that the issuance of stablecoins is possible, but not all legal aspects are defined in the law. Standard regulation means that there is a legal practice of steylcoin circulation in a given country.

Bad Factors

This section describes the unfavorable economic factors for crypto-business in a given country. These are countries that are under sanctions or on the FATF grey list and other factors.

Types of licenses

Crypto-to-crypto

This license type allows VASP to provide legal exchange from one cryptocurrency to another.

Crypto-to-fiat

This type of license regulates the exchange from cryptocurrency to fiat.

Wallet/Custody

This country has a legal licensing procedure for companies that store cryptocurrency - - crypto wallet providers and custodians.

Stablecoin issuer

This indicator means that a special license/license is required to issue stablecoins in this jurisdiction, and the procedure for obtaining it is specified in the legislation.

Good

Medium

Bad

intro

For years, Britain has stayed a global fintech hub. Even offshores as a natural economic and financial phenomenon are a British invention. No wonder the United Kingdom has a complicated crypto regulation framework. The UK also has dozens of overseas territories, which have separate crypto regulation reviews in our ranking.

Security level

The UK has a minor level of danger in our research. It has 53,8 points (from 100) for safety in Numbeo crime rating (1). Homicide level (2) is 1,1 per 100,000 a year. Story of firearm-related death (3) 2,8 per 100,000 a year.

Crypto Payments

There is no law regulating crypto payments in the UK. According to HMRC, cryptocurrency is classified (4) as digital or ‘crypto assets,’ subject to capital gains or income tax, depending on the case. HMRC assumes that it can be converted into GBP by payments.

‍Some UK companies accept Bitcoin Payments, like SCAN UK (5) and Autocoincars (6)

Crypto Salaries

According to HMRC (7), crypto assets received as employment income count as ‘money’s worth’ in EIM00530 (8) and are subject to Income Tax and National Insurance contributions on the asset's value.

An employee may benefit from their employment by receiving a benefit that does not take the form of money. Such profits are often called benefits in kind. Some benefits in kind count as earnings within section 62 ITEPA 2003. Others may be treated as earnings under the benefits code (9). In most cases, the benefits code only applies to benefits that are not otherwise chargeable to tax. So, if a benefit is fully taxable as earnings under section 62 (because it represents money’s worth - see below), the benefits code will not apply.

You may also check some details about this case in the official FAQ (10).

Legal

Most crypto regulations in the country are still provided by bylaws of different regulators, including the FCA, HM Treasury, HMRC, Bank of England, etc. Also, the UK already has some regulations in the form of laws. In 2023, legislators included (11) crypto as a topic in the Financial Services and Markets Act 2023 (12). It defines a crypto asset as a "cryptographically secured digital representation of value or contractual rights". Crypto transactions under FSMA 2023 are regulated as financial activity, including stablecoins, and this framework confirmed the status of FCA as the main regulator.

Also, in 2023, the Parliament clarified the status of illicit crypto transactions—money fraud and financial crime—and approved new amendments (13) to the Economic Crime and Corporate Transparency Bill.

In May 2024, Bitcoin ETP, an analog of Bitcoin ETF, was launched on the local stock exchange. In September 2024, an update to the Property Bill, which includes crypto and NFTs as personal property, was introduced (14) in the Parliament. Also, according to Bloomberg (15), an update regarding the financial regulation of stablecoins and staking is still in discussion.

UK crypto regulations history

As a global fintech hub, the U.K. has been a popular jurisdiction for crypto companies since 2017-2018. There was a light regulatory regime that allowed the operation without an FCA license. Over time, the regulation was tightened - it became mandatory to have a permit. In December 2020, The Financial Conduct Authority (FCA) established a Temporary Registration Regime (16) to allow existing cryptoasset firms who have applied to be registered with the FCA to continue trading. A total of 106 firms applied (17) to the TRR.

In 2018 HM Treasury, the Financial Conduct Authority (FCA), and the Bank of England created a crypto assets task force (18). In 2022, the U.K. government has declared (19) its goal to create a global crypto hub in the country.FCA’s guidance CP19/3 (20), PS 19/22 (21), and HMRC crypto assets manual (22) lay out the different market participants in the crypto-asset ecosystem and the kinds of activities that will be regulated and recognizes three broad categories of crypto-assets: e-money, security, and unregulated tokens. Still, there is a clear regulation framework only for FCA-licensed companies (exchanges, custodian wallets). Utility tokens, ICOs, and DeFi are regulated only case by case (23). There is also no precise regulation for crypto funds.

The Financial Conduct Authority (FCA) is the UK’s main financial regulatory body licensing crypto entities. Here (24) is the detailed guide from the FCA on which firms need to register (or get a license). According to PWC, the FCA prohibits (25) the sale, marketing, and distribution of crypto-derivatives (excluding security tokens) to retail consumers.

According to Cointelegraph (26), in 2022, the amount of crypto companies has dropped to five operating under the TTR regime and 33 licensed by FCA. In the beginning of 2023 there were 41 companies with FCA registration on the list of registered companies (27). By November 2024 the amount of licensed crypto entities hasn't changed much with 47 companies in the register.

Moreover, only 1 company from the register was licensed in 2024 - Genesis Custody Limited. The situation looks like getting FCA license now is possible only for a few entities and we have confirmation in the FCA report (28) - 87% of applications were rejected by FCA in 2023. So it looks like it's a really complicated task for crypto entities to operate in the UK. In previous years, VASP licensed in the EU had the opportunity to operate in the UK, but now it's not an option after the BREXIT legislation upgrade.

Fortunately, an FCA license for cryptocurrency companies does not have to be obtained for all activities - the UK has a fintech e-money license. For crypto payments, for example, it may be sufficient. In addition, businesses can enter into partnership agreements with companies that already have an FCA or e-money license. The regulator is suspicious of this and has already warned companies with too many such partners. Nevertheless, for MSB crypto companies it's probably the one opportunity to operate in the UK.

Taxation

Crypto taxation in the UK is regulated by HMRC, the UK's tax, payments, and customs authority. Koinly (29) and Unbiased (30) provide more information about crypto taxation in the UK into their guides.

Tax name	Index
PIT tax Max	45
PIT tax Min	0
Max Individual CGT tax (for crypto)	20
Min Individual CGT (for crypto)	10
Corporate tax (CIT)	25
Wealth tax Max	0
Wealth tax Min	0

PIT tax

According to Koinly (31), the personal income tax rate applied for crypto is 0-45%. Traders pay income tax on gains and losses over capital gains tax. In addition to the above, businesses will also pay corporation taxes, corporation taxes on chargeable gains, and VAT.

The UK also has a particular procedure for DeFi taxation (32) where PIT is applied.

CGT tax

According to the UK government's official website (33):

“You might need to pay Capital Gains Tax when you:

Capital gain tax - 10% for funds lower than 52,730 GPB and 20% - higher.

CIT tax

Most crypto entities pay an introductory corporate income tax rate of 25%. You may check the HMRC guide for business crypto transactions here (32) and in the HMRC business income manual (34) and HMRC crypto assets manual (35).

Links

1)Numbeo crime rating. Statistics

2)Homicide level. The list of countries by UNODC homicide rate.

3)Firearm-related death. Historical list of countries by firearm-related death rate

4)Is Cryptocurrency Legal In The UK? All You Need To Know. Article

5)SCAN UK. What is Bitcoin?

6)10 Steps on How to Buy a Car with Cryptocurrency. Article

7 and 8)EIM00530 - Employment income: benefits in kind taxable as earnings, meaning 'money's worth.’

9) EIM00513 - Employment income: general earnings: amounts treated as earnings. Government Manual

10)British government manual
11)Dentons. The Financial Services and Markets Act 2023 – reform of cryptoassets regulation

12)Legislation.gov.uk. Financial Services and Markets Act 2023
13)Cointlegraph. UK House of Lords passes bill to seize stolen crypto
14)GOV.UK. New bill introduced in Parliament to clarify crypto’s legal status
15)Bloomberg. UK to spell out crypto plans

16)The number of UK crypto firms operating under FCA temporary registration status drops. Article

17)Registered Cryptoasset firms

18)FCA has established a temporary registration regime for cryptoasset businesses.

19)Economic Crime: responses to the Committee’s Eleventh Report. PDF-file

20)Cryptoassets Taskforce: final report. PDF-file

21)With New Prime Minister, UK Still Wants to Be Crypto Hub: Treasury Official. Article

22)FCA’s guidance CP19/3

23)FCA’s guidance PS 19/2
24)Cryptoassets: AML / CTF regime - Registering with the FCA
25)PwC Global Crypto Regulation Report 2023. PDF-file
26)Cointelegraph Number of UK crypto firms operating under FCA temporary registration status drops
27)FCA Registered and Formerly Registered Cryptoasset firms

28)FCA Annual Report (for the year ended 31 March 2024)

29)Koinly. Crypto Tax UK: Ultimate Guide 2023

30)UK cryptocurrency tax guide: everything you need to know. Article
31)Koinly. Crypto Tax UK: Ultimate Guide 2023

32)Cryptoassets Manual. Decentralised Finance: Lending and staking
33)Business Income Manual. Article

34)Business Income Manual. Article

35)Cryptoassets Manual. Cryptoassets for businesses: Corporation Tax: allowable costs

34)Cryptoassets Manual

35)Crypto Tax UK: Ultimate Guide 2023. Article

Last update: November 2024

Articles

article

Security level

Crypto Payments

‍Some UK companies accept Bitcoin Payments, like SCAN UK (5) and Autocoincars (6)

Crypto Salaries

You may also check some details about this case in the official FAQ (10).

Legal

UK crypto regulations history

Taxation

Tax name	Index
PIT tax Max	45
PIT tax Min	0
Max Individual CGT tax (for crypto)	20
Min Individual CGT (for crypto)	10
Corporate tax (CIT)	25
Wealth tax Max	0
Wealth tax Min	0